Consumerism – This piece is a feature of the Inside the Mind of the CEO collection, providing insight into the myriad strategic choices that chief executives across the globe face.
During the tumultuous initial stages of the COVID-19 pandemic, businesses all over the globe were thrown into turmoil, adapting at breakneck speeds to the evolving situation. It was at this time that Wendy Clark found herself somewhat removed from the fray. Having left her role as the CEO of the advertising agency DDB Worldwide in February 2020, she was poised to begin leading Dentsu International, the global marketing and advertising network of the Tokyo-based Dentsu Group. Nevertheless, bound by a noncompete clause, Clark’s start date was postponed until September 2020, leaving her to observe from afar as both entities navigated the new challenges. This period, although fraught with difficulty, also presented a valuable pause for reflection and preparation before taking the helm of the London-headquartered organisation, which boasts more than 45,000 employees across 144 markets and serves numerous premier global brands from her home office in Atlanta.
At 51, Clark has a longstanding history of dedication and perseverance. After receiving her English degree from Florida State University in 1991, she ventured into a job market constrained by recession. Despite the challenging climate in advertising, her determination led her to accept a position as a receptionist at a modest-sized agency. This decision marked the beginning of an ascent through a series of progressively senior roles in marketing and advertising at companies such as AT&T and Coca-Cola before her transition to DDB Worldwide in 2016. Bringing with her an intimate understanding of client expectations and requirements, Clark embarked upon a significant strategic reform when joining Dentsu International, aiming to augment the firm’s capacity for delivering comprehensive solutions. The fruits of her labour became evident as the company, following nine consecutive quarters of declining revenue, signalled an upturn with three quarters of steady growth to close 2021 with an organic revenue increase of 9.7%. Moreover, it reached its long-standing operational profit margin target of 15% a whole year earlier than planned, amounting to an operational profit of ¥88.9 billion (approximately $772.8 million) for FY21 as reported by the company.
However, the trajectory towards enduring prosperity extends far beyond the realm of financial prowess, necessitating considerations around employee experience, organisational culture, and market positioning. To bridge this gap, Clark has implemented a substantial environmental, social, and governance (ESG) agenda. This includes setting ambitious decarbonisation targets for the company, aiming for a 90% reduction in total emissions throughout its value chain by 2040, and aligning with the World Economic Forum’s Alliance of CEO Climate Leaders, an initiative for corporate heads advocating for proactive and significant climate measures. As Clark articulated in a dialogue with strategy+business, her sector is instrumental not solely in assisting brands to evolve their offerings towards more sustainable products and services but equally in influencing consumer practices towards more mindful consumption.
What is Consumerism?
Consumerism is a social and economic phenomenon characterised by the high consumption of goods and services by individuals in a society. It is rooted in the belief that personal well-being and happiness can largely be achieved through the acquisition of products and services. Consumerism often involves an emphasis on material possessions as a measure of success and social status.
This concept has become more prominent with the rise of modern capitalism and industrialisation, which led to an increase in the production of a wide variety of goods. Advertising and marketing have played a significant role in promoting consumerism, encouraging individuals to frequently purchase new and improved products.
While consumerism can drive economic growth and innovation, it also raises concerns about environmental sustainability, resource depletion, and the impact on individual well-being and societal values. In recent years, there has been a growing movement towards mindful or ethical consumerism, where individuals are more conscious of the environmental and social impacts of their purchases. This approach encourages more sustainable and responsible consumption habits.
What spurred the initiation of this extensive transformation endeavour?
CLARK: When September of 2020 arrived, we broadcasted our vision of condensing from 160 disparate entities into just six global leadership brands with our own Dentsu as the seventh. Our goal was to realise this metamorphosis over a span slightly exceeding two years from the announcement. Local execution was essential: not all brands had a presence in every market, and meanings differed across different regions. We set a definitive end date and crafted a brand framework, then gave our local leaders the reins to implement the plan.
It was pivotal for us to invoke transformation. As the pandemic commenced, we were already in the throes of struggle—the ensuing crisis only worsened our situation. Prior to 2019, the company had amalgamated over a hundred acquisitions within half a decade. The resultant complexity from these myriad additions, alongside an inflated cost base burdened with overlap and redundancy, plagued us. For example, at one juncture we had 250 individuals with the title of “CEO”. We had reached a crossroads where it was imperative to synergise and expedite integration of these rich capabilities to deliver what the market now demands: growth, dynamism, agility, and efficiency. We had an obligation to morph into a network capable of offering cohesive end-to-end solutions that are innovatively idea-led, data-oriented, and technologically infused.
For instance, our mission is facilitating our clients in fostering more impactful and rewarding consumer engagements. Each client I encounter is embarking on some form of data revolution, propelled by both the escalating intricacies of consumer identity comprehension and adherence to regulations concerning privacy and ethical data usage. The expectation on the consumer’s end is clear – they anticipate brands to be astute. The concession of one’s data should be met with relevant, resonant communication, not with untargeted or irrelevant content. Fortunately, the increasing rigour in legislation and governance will yield mutual benefits, engendering virtuous cycles of value between consumers and brands that prove themselves worthy of trust and data.
How have you maintained momentum during the transformation?
CLARK: We opted for transparency within our organisation. We sought to steer clear of protracted periods of change, identifying a unique opportunity to morph into an entity more reflective of client desires. One of our recurrent mantras as this transformation commenced was that we would evolve into “disciplined businesspeople who do what we say we will do”. Imbuing our leaders and personnel with a sense of discipline was, I believed, essential. Strong businesspeople exercise rigor. They set concrete goals and they meet them.
Our “plan on a page” for 2022 has just been finalised, an instrument of management that compresses our annual aspirations onto a single sheet. This document encompasses the six pillars of our enterprise: our people, our clients and partners, our output, our societal impact, our financial targets, and our transformation journey. For each pillar, we have delineated four to five key priorities accompanied by the same number of performance indicators. It’s our accountability tool. With over 45,000 members in our global team, we send a clear message: if your assignments are not reflected within this plan, you should question their relevance with your supervisor.
By the time Q2 of 2021 rolled around, we had bounced back to growth, recording our strongest organic revenue spike in nine quarters and realising our 15% operating margin goal – a feat we achieved an entire year ahead of schedule. And yet, a leader’s role is to persistently exercise caution and to maintain an insatiable desire for improvement. Muhtar Kent, the CEO at Coca-Cola during my tenure, coined the term “constructively discontent”, which aptly encapsulates my outlook. While it’s my duty to be candid about our realities – many of which are progressively positive – I also hold a responsibility to continually urge our team forward. Leadership, as I’ve come to appreciate, is balancing hope with reality. Transparency about where we stand is fundamental, but so is fanning the flames of inspiration and aspiration.
As our organisation returns to a growth trajectory, we concurrently contend with workforce phenomena such as the surge of “the great resignation”. This movement profoundly influenced both our operations and those of our clients’. Being a service-oriented company, this impact is amplified as clients rely on us to be their steadfast support. I’ve had clients seeking secondments from our team, and it’s apparent that the interim burden of business fell on individuals covering for departed staff while we sought replacements. This raised concerns regarding their wellbeing.
In retrospect, had we anticipated this trend, we might have orchestrated shifts in workforce allocation and hastened technological investments and automation. These expedited investments are now in motion—albeit with the wisdom of hindsight. Encouragingly, our attrition rates have begun reflecting those seen in January 2019. However, we must continue to adapt and work in novel ways that resonate with millennial and Gen Z employees.
The surge of resignations has precipitated a profound introspection regarding leadership and the essence of working within our firms. My awareness of my responsibilities towards our people—their ‘duty of care’—has never been so acute. Even amid this trend, our latest staff survey, conducted towards the end of 2021, witnessed the highest level of employee engagement in four years, a testament to the efforts of our leaders. A notable positive from the survey was the sense of connection employees felt with their leaders—a significant achievement in light of remote working conditions. In my 18 months here, my in-person interactions with staff have been limited to about 100 individuals, representing a stark shift from the pre-pandemic norm of weekly flights to meet team members. This illustrates just how our leadership models must evolve.
The survey underscored an improvement in understanding our strategic direction. To enhance this, we’ve intensified our internal communication and broadened accessibility to the leadership team. I host monthly all-staff calls where team members can participate and pose questions—anonymous if they choose. Such initiatives have demystified concerns, especially around remote working. We’ve communicated our commitment to a hybrid working model clearly and consistently. Reinforcing this choice with enthusiasm over compulsion, we aim to spark a Fear Of Missing Out (FOMO) for office-based activities rather than mandating a return.
Transparency extends to client interactions; trust is the bedrock of any agency-client relationship. With a vast network serving over 11,000 clients, handling competitive clients in most sectors necessitates ironclad systems for information security and confidentiality. I have been adamant about the standards of values and integrity expected within our organisation—these are imperatives that I, as CEO, maintain strictly. There’s no grey area with integrity; it’s absolute, akin to the ethos expressed by business leader Indra Nooyi.
Regarding our Environmental, Social, and Governance (ESG) strategy, it plays a pivotal role in both attracting and retaining talent. Dentsu is resolute in its mission to foster a better world for our people, clients, partners, and society. This ethos is particularly resonant with the majority of our workforce, millennials and Gen Z, bearing a median age of 32, who innately advocate for such values. Our commitment to social impact is evident as we lead within the industry by formulating a net-zero plan aligned with a 1.5-degree target and shifting all markets to 100% renewable energy. Moreover, our ambitious target to cut 90% of emissions by 2040 has attained validation from the Science-Based Targets initiative.
The climate crisis has undeniably influenced how we engage with clients. Many participate in initiatives such as the RE100, and through platforms like the World Economic Forum’s Alliance of CEO Climate Leaders, we collaborate with them. Our actions contribute to their Scope Three emissions, therefore we optimise our operations to assist in their decarbonisation efforts. This has become an integral element of client discussions and procurement decisions, even influencing our business pitches.
I acknowledge that as CEO, my commitment to our net-zero goal will be a legacy for future leaders. Initially, I considered the fairness of setting objectives I won’t oversee. However, I concluded that this sets the company on a path towards sustainability—a future that goes from net zero to circular and ultimately regenerative. Inaction isn’t an option; it’s paramount to the planet’s future and consequently, intrinsic to our corporate survival.
Our energy consumption, as a global organisation with multiple offices, significantly contributes to our direct emissions. That’s where our sustainability efforts initially focused and continue to be directed by our renewable energy pledge and workplace strategies. Addressing our indirect emissions, stemming from our supply chain and air travel due to international client engagement, remains a top priority and mirrors the action required from similar service-based companies.
We have made a pledge to significantly cut our emissions from air travel by 65% before the year 2030. Achieving this requires transformational changes in behaviour, proactive investments, and innovative contributions from our supply chains, tailored to our needs. However, it’s clear that the broader goal of net-zero emissions cannot be realised without individual commitment. With this understanding, we are providing guidance and awareness to our workforce of over 45,000 individuals. We aim to enlighten them on the environmental impact of their everyday choices, from domestic energy consumption to transport, and minimising food wastage, among other lifestyle decisions.
Looking further afield from our internal practices, it’s imperative that we leverage our influence with clientele to facilitate a shift in consumer conduct. The UK Climate Change Committee reports that an estimated two-thirds of the progress towards a carbon-neutral society will need to stem from behavioural changes at the consumer level. In light of this, our objective is to assist our clients in promoting products and services that embody sustainability, thus cultivating a market demand for such alternatives.
Could you shed light on the barriers you’ve come across?
CLARK: One major misconception about the role of our industry in promoting consumption is encapsulated in the critique that we simply “help sell more stuff.” Yet, this is precisely why our focus must shift towards fostering a culture of conscious and considerate consumerism, and in guiding our clients to appreciate this imperative as well.
Our responsibility also extends towards considering the ethos of our clientele. Our workforce, which is increasingly composed of millennials and members of Generation Z, is selective about the brands they support, frequently eschewing those that lack a robust sustainability ethos. We excel when our values and those of our clients align. Hence, when a corporation not only articulates its sustainable vision but also shows tangible progress and seeks our expertise, we must rise to the occasion. Our staff are eager to confront and address dire global issues, rather than retreating from such challenges.
This enthusiasm aligns with initiatives like the Alliance of CEO Climate Leaders, where industry leaders, including those from the steel and chemical sectors, actively participate. These executives are navigating complex transitions requiring substantial investment, to which they are deeply committed. Our role is to advocate for and facilitate success throughout this transition.
You’ve set public goals concerning diversity, equity, and inclusion as well.
CLARK: Ensuring a just transition to a net-zero future involves ensuring inclusivity and fairness. The conversation around data transformation in client meetings is inexorably linked with diversity, equity, and inclusion considerations. To this end, we’ve appointed chief equity officers in every region to steer progress. Moreover, we’ve established measurable diversity goals: by 2025, we aim for gender parity at all levels of the organisation, including my direct reports, to address the typical decline in female representation within the leadership hierarchy. In the United States, we have set the target of reaching 30% BIPOC representation by 2025, a benchmark we’re on track to surpass, having achieved 29% to date.
To uphold our commitment to gender equality, we’ve launched an initiative titled “Path of Tabei,” inspired by the pioneering mountaineer Junko Tabei, the first woman to conquer Mount Everest and the Seven Summits. This initiative selects 60 high-potential female leaders for a comprehensive yearlong development experience, bolstering their journey to senior leadership roles within Dentsu. We’re also cultivating parallel development programmes for BIPOC employees in the United States to achieve our diversity objectives.
In the vein of these high-reaching goals, how do you view them in the broader context of the transformation Dentsu has begun?
CLARK: Let me be clear that despite our ambitions, there is always room for further development. There are underlying inequities within our industry that require deeper attention. For instance, our field has historically gravitated towards expensive urban hubs, placing a financial strain on newcomers to the workforce. With remote working becoming a norm, geographical boundaries are dissolving, allowing for greater socioeconomic diversity. Thus, we are expanding our recruitment horizons to embrace candidates from varied backgrounds, which not only enriches our employees’ experiences but also unequivocally enhances the quality of our work. In the same spirit as with our sustainability mandate, I believe there’s no such thing as being too bold when it comes to driving inclusive change.
What are the effects of consumerism?
Consumerism, while a driving force in modern economies, has both positive and negative effects that are worth exploring, especially in a blog format where you can delve into these topics with depth and nuance.
Positive Effects of Consumerism:
- Economic Growth: High levels of consumption drive demand, leading to increased production and economic activity. This can result in job creation and higher levels of prosperity in an economy.
- Innovation and Choice: To meet consumer demands, companies are motivated to innovate and improve their products and services. This leads to a greater variety of choices for consumers and often improves the quality and functionality of products.
- Global Trade: Consumerism can drive global trade, as countries import and export goods to meet the demands of their consumers. This can lead to stronger international trade relationships and cultural exchange.
- Technological Advancements: The desire for newer and better products fuels technological advancements. Consumerism can thus accelerate technological progress in various fields.
Negative Effects of Consumerism:
- Environmental Impact: Increased consumption leads to more waste and greater use of natural resources, contributing to environmental issues like deforestation, pollution, and climate change. The carbon footprint of manufacturing, packaging, and shipping products is significant.
- Resource Depletion: Excessive consumption can lead to the rapid depletion of natural resources, which might not be sustainable in the long run.
- Social Inequality: Consumerism can exacerbate social inequalities. Those who can afford to consume more often have more social prestige, while those who cannot may feel marginalized. It can also lead to exploitative labor practices in countries where goods are produced cheaply.
- Psychological Effects: There is a growing concern about the psychological impact of consumerism, including materialism, dissatisfaction, and the constant pursuit of happiness through consumption, which can lead to mental health issues like anxiety and depression.
- Debt and Financial Instability: Encouraged by marketing and the social prestige of owning certain products, individuals may spend beyond their means, leading to debt and financial instability.